Continuing from my previous blog post, Meh, CapEx, I’m going to take a cynical look at how and why Microsoft has killed its perpetual licensing model. Now don’t get me wrong, it’s not just Microsoft – other vendors have done the same. I think a lot of folks in IT can say they use at least one Microsoft product, so it’s easily relatable.

 

Rant

Let’s start with the poster child for SaaS done right: Office 365. Office 365 isn’t merely a set of desktop applications like Word and Excel with such cool features as Clippy anymore.

Clippy

No, it’s a full suite of services such as email, content collaboration, instant messaging, unified communications, and many more, but you already knew that, right? With a base of 180 million active users as of Q3 2019¹ and counting, it’d be silly for Microsoft not to invest their time and effort into developing the O365 platform. Traditional on-premises apps, though, are lagging in feature parity or in some cases changed in a way that to me, at least, seems like a blatant move to push people towards Office 365. Let’s look at the minimum hardware requirements for Exchange 2019 for example: 128GB memory required for the mailbox server role². ONE HUNDRED AND TWENTY-EIGHT! That’s a 16 times increase over Exchange 2016³. What’s that about then?

 

To me, it seems like a move to guide people down the path of O365. People without the infrastructure to deploy Exchange 2019 likely have a small enough mail footprint to easily move to O365.

 

Like I said in my Meh, CapEx blog post, it’s the extras bundled in with the OpEx model make it even more attractive. Microsoft Teams is one such example of a great tool that comes with O365 and O365 only. Its predecessors, Skype for Business and Lync on-premises, are dead.

 

  Now, what about Microsoft Azure? Check out this snippet from the updated licensing terms as of October 1, 2019:

Beginning October 1, 2019, on-premises licenses purchased without Software Assurance and mobility rights cannot be deployed with dedicated hosted cloud services offered by the following public cloud providers: Microsoft, Alibaba, Amazon (including VMware Cloud on AWS), and Google.

So basically, no more perpetual license on one of the big public cloud providers for you, Mr./Mrs. Customer.

 

Does this affect you? I’d love to know.

 

I saw some stats from one of the largest Microsoft distributors in the U.K., 49% of all deployed workloads in Azure that are part of a CSP subscription they’ve sold are virtual machines. I’d be astonished if this license change doesn’t affect a few of those customers.

 

Wrap It Up

In my cynical view, Microsoft is leading you down a path where subscription licensing is more favorable. You only get the cool stuff with a subscription license, while traditional on-premises services are being made to look less favorable one way or another. And guess what—they were usually licensed with a perpetual license.

 

It’s not all doom and gloom though. Moving to services like O365 also removes the headache of having to manage services like Exchange and SharePoint. But you must keep on paying, every month, to continue to use those services.

 

 

¹ Microsoft third quarter earnings call transcript, page 3 https://view.officeapps.live.com/op/view.aspx?src=https://c.s-microsoft.com/en-us/CMSFiles/TranscriptFY19Q3.docx?version=0e85483a-1f8a-5292-de43-397ba1bfa48b

 

² Exchange 2019 system requirements https://docs.microsoft.com/en-us/exchange/plan-and-deploy/system-requirements?view=exchserver-2019

 

³ Exchange 2016 system requirements https://docs.microsoft.com/en-us/exchange/plan-and-deploy/system-requirements?view=exchserver-2016

 

⁴ Source, Microsoft licensing terms for dedicated cloud https://www.microsoft.com/en-us/licensing/news/updated-licensing-rights-for-dedicated-cloud